Exhibit 10.4


 





AMENDMENT
NO. 3 (ABL CREDIT AGREEMENT)


 


AMENDMENT
NO. 3 dated as of August 1, 2018 (this “Amendment”) to the Credit Agreement dated as of July 21, 2017 (as amended,
restated, amended and restated or otherwise modified prior to the date hereof, the “Credit Agreement”) by and
among Pernix Therapeutics Holdings, Inc., a Maryland corporation (“Parent”), Pernix Therapeutics, LLC, a Louisiana
limited liability company (“Therapeutics”), PERNIX SLEEP, INC., a Delaware corporation (“Sleep”),
Cypress Pharmaceuticals, Inc., a Mississippi corporation (“Cypress”), GAINE, INC., a Delaware corporation (“Gaine”),
Respicopea Inc., a Delaware corporation (“Respicopea”), Macoven Pharmaceuticals, L.L.C., a Louisiana limited
liability company (“Macoven”) and Hawthorn Pharmaceuticals, Inc., a Mississippi corporation (“Hawthorn”,
and together with Parent, Therapeutics, Sleep, Cypress, Gaine, Respicopea and Macoven, collectively, jointly and severally, the
“Borrowers”, and individually, each a “Borrower”), each other Loan Party, the lenders party
thereto and Cantor Fitzgerald Securities, as administrative agent for the lenders (the “Agent”).


 


W I
T N E S S E T H :


 


WHEREAS,
Parent and the Borrowers have requested that the Agent and the Lenders amend the Credit Agreement as set forth herein.


 


NOW,
THEREFORE, the parties hereto agree as follows:


 


Section
1. Defined Terms;
References. Unless otherwise specifically
defined herein, each term used herein that is defined in the Credit Agreement has the meaning assigned to such term in the Credit
Agreement. Each reference to “hereof”, “hereunder”, “herein” and “hereby” and
each other similar reference and each reference to “this Agreement” and each other similar reference contained in
the Credit Agreement shall, after this Amendment becomes effective, refer to the Credit Agreement as amended hereby.


 


“Exchange”
means the exchange of a certain portion of Parent’s outstanding 12% Senior Secured Notes due 2020 (the “Notes”)
for shares of common stock in Parent pursuant to the terms of those certain Exchange Agreements dated as of the date hereof by
and among Parent and, respectively, 1992 MSF International Ltd. and 1992 Tactical Credit Master Fund, L.P., in each case in the
form attached hereto as Exhibit B.


 


Section
2. Amendments to Credit Agreement. Each of the parties hereto agrees that, effective
on the Amendment Effective Date, the Credit Agreement shall be amended as follows:


 


2.1       The
following new defined terms be added to Schedule 1.1 in the appropriate alphabetical order to read as follows:


 


“Amendment
No. 3 (ABL Credit Agreement)” means the document titled “Amendment No. 3 (ABL Credit Agreement)” dated on
or about August 1 2018 by and among, among others, Parent, the Borrowers, each other Loan Party identified therein and the Agent.


 




     


     


    

“Amendment
No. 3 Effective Date” means the “Amendment Effective Date” as defined in the Amendment No. 3 (ABL Credit
Agreement).


 


“Contrave
Assets” means any pharmaceutical products based upon or incorporating Bupropion Hydrochloride and/or Naltrexone Hydrochloride,
also known as CONTRAVE.


 


2.2       Clause
(b)(i) of the definition of “Borrowing Base” contained in Schedule 1.1 therein is hereby amended and restated to read
in its entirety as follows:


 


(i)
$15,000,000,


 


2.3       Clause
(b)(iii) of the definition of “Borrowing Base” contained in Schedule 1.1 therein is hereby amended and restated to
read in its entirety as follows:


 


(iii)
the product of 100% multiplied by the amount calculated pursuant to clause (a)(i) above, minus


 


2.4       The
definition of “Eligible Accounts” contained in Schedule 1.1 therein is hereby amended by (i) deleting “or”
at the end of sub-clause (p) therein, (ii) replacing “.” with “, or” at the end of clause (q) therein,
and (iii) inserting a new sub-clause (r) immediately following sub-clause (q) as follows:


 


(r)       Accounts
arising from the sale or distribution of the Contrave Assets and/or due to the Nalpropion JV.


 


2.5
       Sub-clause (j) of the definition of “Eligible Inventory” contained in
Schedule 1.1 therein is hereby amended and restated to read in its entirety as follows:


 


(j)
it is subject to third party trademark, patent, copyright, licensing or other proprietary rights, unless Agent is satisfied that
(1) such Inventory can be freely sold by Agent on and after the occurrence of an Event of a Default despite such third party rights,
and (2) no change of control or other event has arisen under the terms of any applicable agreement that would permit the owner,
licensor or grantor of any such trademark, patent, copyright, licensing or other proprietary rights to terminate the rights of
Borrowers with respect thereto; provided, however, that (i) Inventory consisting of the Khedezla product in an amount not to exceed
$750,000 in the aggregate shall not be ineligible pursuant to this clause (j), and (ii) the Inventory that constitutes,
or is used in the manufacturing or distribution of, the Contrave Assets, shall constitute Eligible Inventory so long as Agent
is reasonably satisfied that such Inventory can be freely sold by Agent on and after the occurrence of an Event of Default (it
being understood that Agent (at the direction of the Required Lenders) confirms that it is satisfied in respect to  free
salability of the Contrave Assets Inventory based on the facts and circumstances which exist as of Amendment No. 3 Effective Date);


 


2.6
       Sub-clause (p) of the definition of “Eligible Inventory” contained in
Schedule 1.1 therein is hereby amended and restated to read in its entirety as follows:


 


(p)
other than in the case of any item in the Inventory constituting, or used in the manufacturing or distribution of, the Contrave
Assets, it was acquired in connection with a Permitted Acquisition or the Orexigen Transaction, until the
completion of an appraisal and field examination (or such other diligence as Agent shall require) of such Inventory, in each case,


 




    2 


     


    

reasonably
satisfactory to Agent (which appraisal and field examination may be conducted prior to the closing of such Permitted Acquisition
or the Orexigen Transaction).


 


2.7       The
definition of “Maximum Revolver Amount” contained in Schedule 1.1 therein is hereby amended and restated to read in
its entirety as follows:


 


“Maximum
Revolver Amount” means $32,500,000, decreased or increased by the amount of reductions or increases, as the case may
be, in the Revolver Commitments made in accordance with Section 2.4(c) or 2.14, as applicable, of the Agreement.


 


2.8       Section
6.6(a)(i) of the Credit Agreement is hereby amended by (i) deleting “and” at the end of sub-clause (G) therein, (ii)
replacing “or” with “and/or” at the end of clause (H) therein, and (iii) inserting a new sub-clause (I)
immediately following sub-clause (I) as follows:


 


(I)
with respect to the Treximet Note Purchase Debt, payments of principal on the Treximet Note Purchase Debt made solely by exchanging
such Treximet Note Purchase Debt for shares of Qualified Equity Interests without any payment of cash (other than in respect of
fractional shares in an amount not to exceed $50,000).


 


2.9       Schedule
C-1 in the Credit Agreement is amended and restated in its entirety in the form of Schedule C-1 attached hereto. Notwithstanding
anything set forth in the Loan Documents, the Agent, the Borrowers, and each of the Lenders hereto agree that the Commitments
shall be as set forth in Schedule C-1 attached hereto.


 


Section
3. Representations
and Warranties, Covenants and Acknowledgements. To induce the Agent and Lenders to enter
into this Amendment:


 


(a)           
 the Borrowers and each other Loan Party represents and warrants that (i) as of the date hereof and after giving effect
to the amendments hereto, all of the representations and warranties made or deemed to be made under the Credit Agreement and the
other Loan Documents are true and correct, except to the extent that such representations and warranties expressly relate to an
earlier date in which case such representations and warranties shall have been true and correct on and as of such earlier date,
(ii) as of the date hereof and after giving effect to the amendments hereto, there exists no Default or Event of Default under
the Credit Agreement or any of the other Loan Documents, (iii) it has the power and is duly authorized to enter into, deliver
and perform this Amendment, (iv) this Amendment and each of the other Loan Documents is the legal, valid and binding obligation
of each Loan Party, enforceable against each Loan Party in accordance with its terms, except to the extent enforcement may be
limited under applicable bankruptcy, insolvency, reorganization, receivership, moratorium, or similar laws affecting creditors’
rights generally and the equitable discretion of the court;


 


(b)           
each Loan Party hereby reaffirms each of the agreements, covenants, and undertakings set forth in the Credit Agreement
and each other Loan Document executed in connection therewith or pursuant to, as amended and modified hereby, to which it is a
party; and


 


(c)           
Each Loan Party acknowledges and agrees that this Amendment shall be deemed a Loan Document for all purposes under the
Credit Agreement.


 




    3 


     


    

Section
4. Effectiveness. This Amendment shall
become effective on the first date on which each of the following conditions have been satisfied (the “Amendment Effective
Date”): (x) when the Agent shall have received (i) from each of the Loan Parties, the Required Lenders and the Agent
an executed counterpart hereof signed by such party or facsimile or other written confirmation that such party has signed a counterpart
hereof and (ii) the fully executed Amendment No. 2 to the 2017 Term Facility, dated as of the date hereof, in the form attached
hereto as Exhibit A and (y) substantially simultaneously therewith, the Exchange shall have been consummated.


 


Section
5. Reaffirmation
of Guaranty. Each Guarantor, for value received, hereby expressly acknowledges and agrees
to the Borrower’s execution and delivery of this Amendment, to the performance by each of the Borrowers of its agreements
and obligations hereunder and to the consents, amendments and waivers set forth herein. The Amendment, the performance or consummation
of any transaction or matter contemplated under the Amendment and all consents, amendments and waivers set forth herein, shall
not limit, restrict, extinguish or otherwise impair such Guarantor’s liability to the Agent or Lenders with respect to the
payment and other performance obligations of such Guarantor pursuant to the Guaranty and Security Agreement. Each Guarantor
hereby ratifies, confirms and approves its obligations under the Guaranty and Security Agreement and acknowledges that it is unconditionally
liable to the Agent and Lenders for the full and timely payment of the obligations under the Guaranty and Security Agreement.


 


Section
6. Counterparts. This Amendment may
be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. Delivery of an executed signature page of this Amendment by facsimile, email or other
electronic transmission shall be effective as delivery of a manually executed counterpart to this Amendment.


 


Section
7. Amendment, Modification
and Waiver. This Amendment may not be amended, modified or waived except by an instrument
or instruments in writing signed and delivered on behalf of each of the parties hereto.


 


Section
8. Severability. If any provision of this Amendment is held to be illegal, invalid
or unenforceable in any jurisdiction, the legality, validity and enforceability of the remaining provisions or obligations, or
of such provision or obligation in any other jurisdiction, of this Amendment and the other Loan Documents shall not be affected
or impaired thereby.


 


Section
9. Headings. Section and Subsection headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this Amendment for any other purpose or be given any substantive
effect.


 


Section
10. Governing Law; Waiver of Jury Trial. Section 12 of the Credit Agreement is hereby
incorporated herein by reference mutatis mutandis.


 


SECTION 11.
Fees and Expenses. Borrowers and the Guarantors hereby reconfirm their respective obligations pursuant to the Credit Agreement
to pay and reimburse the Agent and the Lenders for all reasonable costs and expenses (including, without limitation, reasonable
and documented fees of counsel to the Agent and Lenders) incurred in connection with the negotiation, preparation, execution and
delivery of this Agreement and all other documents and instruments delivered in connection herewith.


 


[Remainder
of this page intentionally left blank]


 




    4 


     


    

IN WITNESS WHEREOF, the parties
hereto have caused this Amendment to be duly executed as of the date first above written.


 


	BORROWERS:	PERNIX THERAPEUTICS HOLDINGS, INC.
	 	 
	 	 	By:	 
	 	 	 	Name:Kenneth R. Pina
	 	 	 	Title:   Corporate Secretary



 


 

	 	MACOVEN PHARMACEUTICALS, L.L.C.
	 	 
	 	By:	 
	 	 	Name:John A. Sedor
	 	 	Title:Manager



 


 

	 	PERNIX THERAPEUTICS, LLC
	 	 
	 	By:	 
	 	 	Name:John A. Sedor
	 	 	Title:Manager



 


 

	 	CYPRESS PHARMACEUTICALS, INC.
	 	 
	 	By:	 
	 	 	Name:Kenneth R. Pina
	 	 	Title:Senior Vice President & Corporate Secretary



 


 

	 	GAINE, INC.
	 	 
	 	By:	 
	 	 	Name:Kenneth R. Pina
	 	 	Title:Senior Vice President & Corporate Secretary



 


 





 


 


[Signature
Page to ABL Amendment No. 3]





 








     


     


    

	 	RESPICOPEA INC.
	 	 
	 	By:	 
	 	 	Name:Kenneth R. Pina
	 	 	Title: Senior Vice President & Corporate Secretary



 


 

	 	HAWTHORN PHARMACEUTICALS, INC.
	 	 
	 	By:	 
	 	 	Name:Kenneth R. Pina
	 	 	Title:Senior Vice President & Corporate Secretary



 


 

	 	PERNIX SLEEP, INC.
	 	 
	 	By:	 
	 	 	Name:Kenneth R. Pina
	 	 	Title:Senior Vice President & Corporate Secretary



 


 


 


[Signature
Page to ABL Amendment No. 3]


 



     


     


    

	GUARANTORS:	PERNIX IRELAND DESIGNATED ACTIVITY COMPANY
	 	 
	 	 	By:	 
	 	 	 	Name:Angus Smith
	 	 	 	Title:Director



 


 

	 	PERNIX IRELAND LIMITED
	 	 
	 	By:	 
	 	 	Name:Angus Smith
	 	 	Title:Director



 


 

	 	PERNIX HOLDCO 1, LLC

         

        By: Pernix Therapeutics,
        LLC

        

        Its: Sole Member and
        Sole Manager

         

	 	By:	 
	 	 	Name:John A. Sedor
	 	 	Title:Manager



 


 

	 	PERNIX HOLDCO 2, LLC

         

        By: Cypress Pharmaceuticals,
        Inc.

        

        Its: Sole Member and
        Sole Manager

         

	 	By:	 
	 	 	Name:Kenneth R. Pina
	 	 	Title:Corporate Secretary



 


 

	 	PERNIX HOLDCO 3, LLC

         

        By: Pernix Therapeutics
        Holdings, Inc.

        

        Its: Sole Member and
        Sole Manager

         

	 	By:	 
	 	 	Name:Kenneth R. Pina
	 	 	Title:Corporate Secretary



 


 


 


[Signature
Page to ABL Amendment No. 3]


 



     


     


    

	LENDERS:	1992 MSF INTERNATIONAL LTD. 
	 	 	BY: HIGHBRIDGE CAPITAL MANAGEMENT, LLC, AS TRADING MANAGER,
	 	 	 
	 	 	By:

         
	 
	 	 	 	Name:Jonathan Segal
	 	 	 	Title:Managing Director
	 	 	 	 
	 	 	By:	 
	 	 	 	Name:Jason Hempel
	 	 	 	Title:Managing Director



 


 

		1992 TACTICAL CREDIT
        MASTER FUND, L.P.

        

	 	 	BY: HIGHBRIDGE CAPITAL MANAGEMENT, LLC, AS TRADING MANAGER,
	 	 	 
	 	 	By:

        
	 
	 	 	 	Name:Jonathan Segal
	 	 	 	Title:Managing Director
	 	 	 	 
	 	 	By:	 
	 	 	 	Name:Jason Hempel
	 	 	 	Title:Managing Director



 


 


 


[Signature
Page to ABL Amendment No. 3]


 



     


     


    

	 	CANTOR FITZGERALD SECURITIES, as Agent
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:



 


 


 


 


[Signature
Page to ABL Amendment No. 3]


 



     


     


    

EXHIBIT
A – AMENDMENT NO. 2 TO 2017 TERM FACILITY


 


See attached.


 


 


 




     


     


    

EXHIBIT
B – EXCHANGE AGREEMENTS 


 


See attached.


 


 


 




     


     


    

SCHEDULE
C-1 – COMMITMENTS


 


	Lender

        
	Revolver
    Commitment	Total Commitment

        

	1992
    MSF International Ltd	[          ]	[           ]
	1992
    Tactical Credit Master Fund, L.P.	[          ]	[           ]
	All
    Lenders 	[          ]

        
	[           ]